Australia hikes rates to 18-year high to fight inflation — SkimNews
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- RBA raised the benchmark cash rate by 25 basis points to 4.85% on Tuesday, its fifth increase this year and the highest level since November 2008, matching economists’ expectations in a Reuters poll.
- RBA decided to hike by a split 6-3 vote, with six members favoring the increase and three choosing to hold.
- Australia recorded 4.3% consumer-price inflation in September, up from 4% in August and the highest rate since March.
- RBA projected inflation would remain elevated through much of 2027, with the 2%-3% target range not regained until late 2027 — three quarters later than its previous forecast.
- RBA cited higher fuel and other commodity prices, along with AI-related investment rapidly raising technology-goods prices, as factors keeping inflation elevated.
- Michelle Bullock said in September that inflation was “too high,” driven by Iran War-related oil prices and stronger domestic spending; she subsequently said upside risks were materializing and more hikes would come if needed.
- Australia posted 2.1% year-over-year GDP growth in the June quarter, down from 2.5% in March, while Bullock said a recession was not the base case.
Why it matters: Australian households already face higher borrowing costs and cost-of-living pressure, so a fifth rate increase this year compounds the strain on spending. The RBA’s 6-3 split and three-quarter delay to late 2027 show that returning inflation to its 2%-3% target is a longer policy effort than previously forecast.
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